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I write extensively on the U.S. Dividend Champion list maintained and updated by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.

My initial Dividend Champion articles focused on just the Dividend Champions. However, DRIP Investing also maintains a Dividend Contenders list which is comprised of stocks with a history of raising dividends for the past 10-24 years.

Combining April's Dividend Champions and Dividend Contenders into one list gives us a strong starting point of 242 stocks with long histories of raising dividends. Historical tests have also shown that stocks with higher yields and lower payout ratios have tended to outperform other stocks.

With this information in tow, I ranked the yields and payout ratios of the 242 stocks with histories of 10+ years of dividend increases. The yield and payout ratio ranks were added to create an average overall rank for each stock.

We are left with a list of stocks for further research. The top 15 stocks based on yield and payout rank are listed below. In addition, the bottom five stocks (those with the lowest combined yield and payout rank) are listed.

This list is valuable to investors seeking companies with a commitment to paying dividends, high yield, and dividend sustainability/margin of safety. Universal (NYSE:UVV) tops the list with its healthy 4.59% yield and low payout ratio of 32%. UVV is also currently trading below its book value at a price/book ratio of 0.84. However, earnings growth is projected to decline next year and the stock is currently being sold by institutions and has a relatively high short float of 11.98%.

For those interested in creating a system of their own for free using Finviz and Excel, Open Office, or Google Docs, please see a recent article providing in-depth step-by-step instructions.

Note: Data Source DRIP Investing, MSN, and Finviz. Always conduct your own research as statistical anomalies can exist, especially in instances of short-term earnings fluctuations skewing payout ratio.

Top 15 4/1/11 Champions & Contenders


Company Symbol Yield Payout Ratio Yield / Payout Rank
Universal Corp. UVV 4.59% 32% 1
Republic Bancorp KY RBCAA 2.95% 18% 2
Chesapeake Financial Shares OTCQB:CPKF 3.11% 21%3
PartnerRe Limited PRE 2.80% 19% 4
ConocoPhillips COP 3.38% 28% 5
Sunoco Logistics Partners LP SXL 5.50% 48% 6
Chubb Corp. CB 2.58% 21% 7
ACE Limited ACE 2.05% 14% 8
Norwood Financial NWFL 4.33% 43% 9
Hudson City Bancorp HCBK 6.28% 55% 10
AT&T Inc. T 5.67% 52% 11
Citizens Financial Services OTCQB:CZFS 2.86% 27% 12
General Dynamics GD 2.65% 24% 13
Teche Holding Co. TSH 4.00% 41% 14
NextEra Energy NEE 4.01% 43% 15
Bottom 5
Alterra Capital Holdings Ltd. ALTE 2.22% 116% 238
Harsco Corp. HSC 2.43% 596% 239
RLI Corp. RLI 1.99% 134% 240
Royal Gold Inc. RGLD 0.78% 55% 241
EOG Resources Inc. EOG 0.58% 98% 242
Source: Top Dividend Stocks Based on Dividend History, Yield and Payout